AAPL and IBM Earnings

Generally, I do not comment on specific earnings reports for individual equity names via this blog. However, within the results for AAPL and IBM, there are THREE macro themes that are extremely supportive of my expectation that the domestic economic recovery will advance in 2011.

1. The Resilient U.S. ConsumerThe seasonally strong "holiday quarter" exceeded all expectations for AAPL. Early in the fall of 2010, I highlighted the potential for holiday sales of AAPL products to provide investors with insight toward the true state of the consumer. During the "holiday quarter," consumers abandoned frugality to aggressively purchase.

7.33 million iPads vs. 6 million consensus

16.2 million iPhones vs. 16 million consensus

19.5 million iPods vs. 18.7 million consensus

4.13 million Mac computers vs. 4.2 million consensus

Guidance for the upcoming quarter was given as $4.90 per share on sales of $22 billion, well ahead of consensus estimates of $4.47 per share and sales of $20.9 billion, as the availability of the iPhone expands into Verizon stores in Q1 2011.

3. M&A Surge in 2011The competitors of these two technology giants must keep pace. Growth can be attained organically or via acquisitions. Given the robust cash balances in the technology sector and the excellent earnings reports of January 18, I expect an increase in M&A as IBM and AAPL competitors attempt to compete and pay a premium for growth over the next few months.

Past performance is not a guarantee of future results.

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